07/28/2014

In a consolidation, two or more corporations combine to form a new corporation. In our earlier example, suppose Ajax and Acme decided to consolidate rather than merge. In that case, neither Ajax nor Acme would survive the consolidation. Instead, a new corporation (call it NewCo) would be formed and succeed to all the assets, rights, duties, liabilities and so on of both Ajax and Acme. The differences between the merger and the consolidation thus are purely form and semantics. They are effected in the same manner and have the same substantive results. as a result, in colloquial speech (even among sophisticated lawyers) the terms are often used interchangeably.

So here's my questions: When would you expect a client to prefer a consolidation to a merger, if ever? When would you advise a client to choose a consolidation over a merger, if ever?

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In a consolidation, two or more corporations combine to form a new corporation. In our earlier example, suppose Ajax and Acme decided to consolidate rather than merge. In that case, neither Ajax nor Acme would survive the consolidation. Instead, a new corporation (call it NewCo) would be formed and succeed to all the assets, rights, duties, liabilities and so on of both Ajax and Acme. The differences between the merger and the consolidation thus are purely form and semantics. They are effected in the same manner and have the same substantive results. as a result, in colloquial speech (even among sophisticated lawyers) the terms are often used interchangeably.

So here's my questions: When would you expect a client to prefer a consolidation to a merger, if ever? When would you advise a client to choose a consolidation over a merger, if ever?